Global confidence in car industry decreasing

KPMG’s 24th Annual Global Automotive Executive Survey shows that global confidence in the automotive industry is decreasing.

This is mainly due to concerns about the global economy and rising costs. According to the survey,  only China stands out as a country where confidence in the sector is growing.

The survey also highlighted a more realistic outlook on the transition to electric vehicles (EVs). Executives now have more consistent expectations for EV market growth, but there are still challenges, especially regarding the profitability of EVs for carmakers.

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Tesla still strong

The survey also indicated that despite increased competition from established brands introducing new models, Tesla is still expected to remain a dominant player in the industry.

However, the industry as a whole is becoming more cautious about market prospects and is reevaluating ways to address challenges like changing consumer habits and cost-of-living issues.

Gary Silberg, Global Head of Automotive at KPMG International, said: “A year ago, we said that automotive executives sensed the future was theirs to seize. In the latest survey, more than 1,000 executives in 30 countries again said they see enormous opportunities.

“But they are becoming more sober in their assessment of market prospects. Having committed more than half a trillion dollars to the EV transition, the industry is asking when companies will see a return on the investment. Right now, almost all automakers are losing money on their battery-electric vehicles, possibly presaging a shakeout among EV manufacturers and suppliers.”

Closer to home

In South Africa, the automotive industry faces challenges in producing relevant products for export and meeting domestic customer needs, especially with the increasing demand for alternative drivetrains in other markets.

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Dex Machido, Automotive Sector Lead at KPMG in Southern Africa, said: “The outcome from this year’s survey points to clear and imminent challenges for the Automotive Industry in South Africa.

The accelerated uptake of alternative drivetrains by key markets such as Europe and others brings into question the ability for South Africa to produce relevant products for export while continuing to cater for domestic customer needs. There is also a need to address customer experience challenges in accelerating the local adoption of new energy vehicles beyond early adopters. This makes it necessary for the industry to develop greater strategic clarity, taking into consideration the ability to transition, especially in the context of addressable market segment and value for customers.”

Pressing issues for the industry

Customer experience is becoming a crucial factor for car buyers, with a hassle-free experience ranking second in importance after performance. Cybersecurity concerns, supply chain disruptions, and the complexity of advanced technologies like AI are also pressing issues for the industry.